Should I Write A Will When Buying a Home?
Of course, the process of buying a house can be long and complicated, and certainly tiring for yourself sometimes too. But there’s something else that’s extremely important to think about during this time too, and that’s the idea of writing a Will.
Writing A Will When You Buy A Home
Why is writing a Will important when buying a house?
The purpose of this is to protect and plan for your new property, writing down what should happen with your assets after you pass away.
This is especially important for first-time buyers because this house will probably be the biggest purchase you’ve ever made, and possibly the biggest you ever will make. Therefore, your assets are suddenly at a much higher overall value, and this needs to be protected.
First Time Buyers - Are You Too Young to Write a Will?
No matter your age, you could be in your 20s, 30s, or even teens; if you’re buying a house, you’re certainly not too young to be writing a Will.
Of course, it’ll feel way too early to be thinking about death and planning what you’d want to happen to your assets after you die, but it’s something you really need to do after purchasing your first home.
Plus, with younger couples buying their first home, it’s very possible that they won’t be married yet. This is a significant detail when it comes to inheriting the house if one of the partners in the couple sadly passes away.
Owning a house can increase the value of your estate so much that it may surpass the inheritance tax threshold of £325,000. This is particularly relevant if you’re a first-time buyer, as your current estate value is likely to be miniscule in comparison with its value after the transaction.
What if you don’t write a Will?
Not having a Will in place can cause a variety of problems, most notably for your loved ones. When you pass away, your friends and family will obviously be feeling sad already, and then the process of dealing with your estate can also be distressing. Having a Will just makes this whole time a lot less stressful for your loved ones, avoiding unnecessary issues by stating in your Will what your wishes are.
Furthermore, if you don’t specify in a Will what you want to happen with your property after you die, it will be passed on using the courts’ Rules of Intestacy and may end up in the possession of somebody you wouldn’t have chosen, potentially leaving your children and spouse with nowhere to live.
Co-owning A House and Writing A Will
What if I own my house with someone else?
It’s common for people to co-own a house e.g. with your partner.
There are a couple of ways in which you can co-own a house with someone; there’s the option of being ‘joint tenants’ or alternatively ‘tenants in common’.
Two people co-owning a house as joint tenants is the most frequent option. However, this can lack flexibility, which you must take note of. Joint tenants each own an equal share of the property, and upon the death of one of the owners, the other would automatically take ownership of the other half and therefore become sole owner of the property.
This provides difficulties in a situation in which one of the co-owners wants to pass the house on to, for example, one of their adult children in order to utilise the nil-rate band. During lifetime or by Will, the property can not be passed on to a beneficiary. It would pass automatically to the surviving joint owner.
If neither of you have written a Will, then the house would pass under the rules of intestacy and intestacy rules would decide who shall inherit the property. This means that you will have no say in who inherits the house, which can cause great distress to surviving family members and people you would’ve had as beneficiaries, especially if they were expecting and depending upon inheriting the house.
To avoid such complications, it is easier to own the house as ‘tenants in common’.
Tenants in Common
Co-owning the house as tenants in common is a much more flexible option for both people, allowing you to share out your assets at your own discretion.
As tenants in common, both of you will own a share of the property. You don’t even have to own equal shares either; it’s completely up to the two of you to decide how you wish to split the shares of the house.
Furthermore, when you write a Will, the advantage of being tenants in common allows you to decide who you want your share to go to. You can even split your share up among multiple beneficiaries. This can prove advantageous for partners / joint owners with children from different relationships to ensure that their children receive their parents share eventually and that their share does not go else where.
There can also be advantages when it comes to future care home fees and your Will, if you hold your property as tenants in common and you give your partner / co owner a life interest in your half share of the property.
Don’t worry if you’re currently owning your house as joint tenants, as you can easily change this to tenants in common.
Living with Partner but Unmarried
If you live with your partner but you’re not married, what will happen to your house if your partner, who owns the house, passes away?
If your partner owned the house on their own but then pass away without having written a will, the property will be passed on in accordance with the rules of intestacy. Under these rules, the house is not guaranteed to pass onto you, even if your partner would have chosen you as the beneficiary of the house. Instead, the house could be inherited by family members instead, or maybe any children they’ve had in a previous relationship.
As an unmarried couple, in order for your assets to be inherited by one another on the sad event of death, Wills must be written.
However, if you have been making some form of contribution towards the house you’ve been living in, despite being unmarried and not being a beneficial joint tenant. you may have some rights. This is because these contributions display a beneficial interest.
Therefore, you may have the right to live in the house or be given a share of its value if it gets sold, this would have to be decided by Court.
‘Beneficial interest’ is essentially just interest in the economic benefit of the property in question. This type of interest can arise if a Trust has been formed. The property may be in one name (the name of your partner), but a Trust allows for the benefit or value of the property to be shared. This doesn’t have to be an equal share, though.
If you do end up inheriting property or money from an unmarried partner, you won’t be exempt from inheritance tax, as married couples are.
The most important thing to remember is that all these complications can be avoided by ensuring that you and your partner both have an up-to-date Will written. In the Will, you can make sure that your intentions are clear, and you can simply state that you want your partner to inherit the property if you were to die.
Other Important Times to Look at your Will
Best times to update your Will
Buying a house isn’t the only life event that merits writing or updating your Will. If you have written a Will already, good job! We advise you review your Will every four to five years, or after any major life events, including:
- Having a baby
- Getting married
- Getting divorced/separated
- Buying other large assets
- The death of your Will’s executor
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